4 Difference between Insurance and Assurance

In theory various scholars or insurance have tried to distinguish between these two words;

First of all, some scholars said that the term insurance is used only where the risk, through probability can be ascertain i.e. it may or may not happen at a certain time in future.

Facts of indemnity are of this type e.g. fire and marine insurance.


Second, a building may or may not catch fire; the ship may meet a disaster or may reach the port of destination safely.

In such cases;

The policy may not sure to become a claim, while assurance should be applied to such contracts where the policy is bound to become a claim i.e. where the risk insured against must happen sooner or later.

This is so in life contracts. The man must die or must attain a particular age. The risk is certain. According to this view, the term assurance should be used for life contracts and insurance for indemnity contracts.

Third, the other distinction attempted is that insurance comes from the insured while the assurance from the insurer.

In other words, the insurer assures the insured of his life or property while the insured insures himself against his life or property.

Fourth, Still another distinction drawn is that assurance denotes the principle where as insurance denotes the practice.

The above distinctions, though in theory correct, but not hold well in practice.

By usage both the terms are discriminate all over the world and it is needless to be very particular about their use. In practice the terms have become interchangeable.